Breedon Group PLC · LSE:BREE
Breedon — H1 2016 Earnings Presentation
36 slides from Breedon's earnings presentation, Jul 21, 2016
Slide 1: Half-Year 2016 Results
HALF-YEAR 2016 RESULTS 21 July 2016 BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 1
Slide 2: H1 2016: Results
H1 2016: RESULTS Introduction Peter Tom CBE, Executive Chairman Financial review Rob Wood, Group Finance Director Group overview Pat Ward, Group Chief Executive England review Tim Hall, Breedon Aggregates England Scotland review Alan Mackenzie, Breedon Aggregates Scotland Update on Hope, new brand &
Slide 3: Introduction
H1 2016: INTRODUCTION Peter Tom CBE Executive Chairman BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 3
Slide 4: Continuing Strong Progress
H1 2016: CONTINUING STRONG PROGRESS Excellent first-half operating performance, with strong contributions from both England and Scotland Underlying EBIT margin improved to 14.0% Strong earnings growth and cash generation As planned, significant increase in capital expenditure as investment continued
Slide 5: Breedon's 'Golden Rules'
H1 2016: BREEDON’S ‘GOLDEN RULES’ 1 Stay local g Easy to do business with at every site 2 Stay nimble g Maximise opportunities in our markets & develop new ones 3 Devolve responsibility g Allow decision-making by regional teams 4 Squeeze our assets g Maximise return from every tonne of material 5 El
Slide 6: Financial Review
H1 2016: FINANCIAL REVIEW Rob Wood Group Finance Director BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 6
Slide 7: Financial Highlights
H1 2016: FINANCIAL HIGHLIGHTS Revenue Underlying EBIT Underlying EBIT margin £163.0m £22.8m 14.0% H1 2015: £160.5m +2% H1 2015: £18.9m +21% H1 2015: 11.8% +2.2ppt PBT Underlying basic EPS Net cash £20.9m 1.50p £17.6m H1 2015: £17.5m +19% H1 2015: 1.29p +16% at Dec 2015: £10.3m +£7.3m BREEDON AGGREGA
Slide 8: Income Statement
H1 2016: INCOME STATEMENT H1 2015 H1 2016 Variance £ million £ million % Revenue 160.5 163.0 +2% Underlying EBITDA* 27.3 31.4 +15% Depletion & depreciation (8.7) (9.0) Underlying operating profit* 18.6 22.4 +21% Share of associate and joint venture 0.3 0.4 Underlying EBIT* 18.9 22.8 +21% Interest (1
Slide 9: Divisional Performance
H1 2016: DIVISIONAL PERFORMANCE Revenue (H1 2015) £ million Revenue (H1 2016) £ million +1% +2% +2% H1 2015 H1 2016 Variance Underlying EBIT £ million £ million % England 12.6 15.9 +26% Scotland 9.0 10.0 +12% Head Office (3.0) (3.5) Share of associate and joint venture 0.3 0.4 Underlying EBIT 18.9 2
Slide 10: Product Volumes
H1 2016: PRODUCT VOLUMES Aggregates Asphalt Concrete million tonnes million tonnes million m3 +4% -1% +13% BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 10
Slide 11: Net Cash Movement
H1 2016: NET CASH MOVEMENT £ million Inflow Outflow BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 11
Slide 12: Group Overview
H1 2016: GROUP OVERVIEW Pat Ward Group Chief Executive BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 12
Slide 13: H1 2016 Market Background
H1 2016 MARKET BACKGROUND Economy grew by 0.4% in Q1 and was thought to be improving in Q2 However, heightened economic and political volatility leading up to and following the EU Referendum likely to have resulted in more muted growth than previously expected First-quarter MPA volumes generally fla
Slide 14: Excellent Performance
H1 2016: EXCELLENT PERFORMANCE Strong contributions from both England & Scotland Balanced new business mix: major contracts & smaller customers Sustained improvement in underlying EBIT margins in both businesses despite - Slow start to the year in Scotland - Temporary delays to some major contracts
Slide 15: England Review
H1 2016: ENGLAND REVIEW Tim Hall Chief Executive – Breedon Aggregates England BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 15
Slide 16: Breedon Aggregates England
BREEDON AGGREGATES ENGLAND Revenue 535 15 9 employees quarries asphalt plants 53% of Group revenue Underlying EBIT 23 1 2 ready-mixed concrete concrete regional contract and mortar plants products plant surfacing operations as at 30 June 2016 61% of Group underlying EBIT BREEDON AGGREGATES HALF-YEAR
Slide 17: England Summary
H1 2016: ENGLAND SUMMARY H1 2015 H1 2016 £ Volumes £ million million Variance +2% Revenue 84.1 86.0 +2% EBITDA 16.9 20.2 +20% Aggregates EBIT 12.6 15.9 +26% EBIT margin 15.0% 18.4% +3.4ppt -5% Asphalt Continued focus on VFL and drive to zero harm Regional demand variations Asphalt volumes down due t
Slide 18: Major Contracts Supplied
H1 2016: MAJOR CONTRACTS SUPPLIED DHL Cargo Hub, East Midlands Airport East Midlands Airport expansion Jaguar Land Rover, i54 New Amazon distribution centre Midland Metropolitan Hospital Worcester Southern By-Pass Newtown By-Pass BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 18
Slide 19: England Outlook & Priorities
H1 2016: ENGLAND OUTLOOK & PRIORITIES Continuing focus on safety improvements & operational efficiencies Close review of commercial strategies in changing markets Speedy integration of Hope, organisational restructure & capture of synergies Open new Earls Barton sand & gravel unit Identify potential
Slide 20: Scotland Review
H1 2016: SCOTLAND REVIEW Alan Mackenzie Chief Executive – Breedon Aggregates Scotland BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 20
Slide 21: Breedon Aggregates Scotland
BREEDON AGGREGATES SCOTLAND Revenue 728 38 18 employees quarries asphalt plants 47% of Group revenue EBIT 37 2 6 1 ready-mixed concrete regional contract traffic concrete products plants surfacing management and mortar plants operations services company as at 30 June 2016 39% of Group underlying EBI
Slide 22: Scotland Summary
H1 2016: SCOTLAND SUMMARY H1 2015 H1 2016 Volumes £ million £ million Variance +7% Revenue 76.4 77.0 +1% EBITDA 13.4 14.7 +10% Aggregates EBIT 9.0 10.0 +12% EBIT margin 11.7% 13.0% +1.3ppt +6% Asphalt Increased focus on safety with 4th annual roadshow and reinvigorated VFL visits Market slow in Aber
Slide 23: Major Contracts Supplied
H1 2016: MAJOR CONTRACTS SUPPLIED Significant offsite deliveries to AWPR Major on-site supplies to A9: asphalt, road-grade & structural concrete Kilgallioch & Harehill wind farms Two new substations in north Highlands Fife Council – under local area framework Major concrete supplies to V&A Museum, D
Slide 24: Scotland Outlook & Priorities
H1 2016: SCOTLAND OUTLOOK & PRIORITIES Short-term outlook challenging due to market uncertainty, but AWPR and A9 will help underpin performance in second half & 2017 Integrate Hope units and identify best operational and commercial practice Create best-in-class management team, drawing on talent fro
Slide 25: Update on Hope, New Brand & Outlook
UPDATE ON HOPE, NEW BRAND & OUTLOOK Pat Ward BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 25
Slide 26: Update on Hope
UPDATE ON HOPE Completion expected on 1 August (subject to final clearance from the CMA) New group structure agreed: Breedon Northern, Breedon Southern & Hope Cement Proposed company name to change to Breedon Group plc Constitution of Board & Executive Committee confirmed Head office at Breedon on t
Slide 27: Breedon Group plc: New Brand
BREEDON GROUP PLC: NEW BRAND BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 27
Slide 28: Group Outlook
H1 2016: GROUP OUTLOOK The EU Referendum result has created uncertainty However, there are some encouraging early signs from Government of continued commitment to infrastructure investment, the need for which remains urgent We believe our business remains well placed - We have some major contracts t
Slide 29: Q&A
H1 2016: Q&A Q&A BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 29
Slide 30: Appendices: MPA Volumes
H1 2016: APPENDICES MPA volumes BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 30
Slide 31: MPA Aggregates Volumes – MAT
MPA AGGREGATES VOLUMES – MAT 170 150 million tonnes 130 110 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 31
Slide 32: MPA Asphalt Volumes – MAT
MPA ASPHALT VOLUMES – MAT 27 25 million tonnes 23 21 19 17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 32
Slide 33: MPA Ready Mix Concrete Volumes – MAT
MPA READY MIX CONCRETE VOLUMES – MAT 24 22 million cubic metres 20 18 16 14 12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 33
Slide 34: Appendices: Information on Hope
H1 2016: APPENDICES Information on Hope BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 34
Slide 35: Expanded Geographical Footprint
EXPANDED GEOGRAPHICAL FOOTPRINT At 30 June 2016 Breedon Hope (following CMA-required divestments) BREEDON AGGREGATES HALF-YEAR 2016 RESULTS 21 JULY 2016 35
Slide 36: Forward-looking statements disclaimer
This presentation may contain statements related to our and our subsidiaries' future business and financial performance, and future events or developments involving Breedon Aggregates that are not purely historical and which may constitute forward-looking statements. These statements may be identifi